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Investment Environment

Productivity in Germany - Key Data

An excellent labor force and efficient production processes have led to an increase in productivity - higher than that in labor costs - over the past decade.

Germany's reputation as a production powerhouse precedes it. A highly skilled workforce, stable labor costs and advanced industrial processes make it the preferred European site for foreign direct investments.

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Competitive Production
Labor Market

Competitive Production

Germany is an attractive production location thanks to high productivity, stable labor costs and advanced manufacturing processes.

High Productivity
Stable Labor Costs
Highly Automated Manufacturing

High Productivity

In terms of nominal unit labor costs, Germany has gained in productivity over the past decade. While some European countries, especially in Eastern Europe, are showing a substantial increase in nominal unit labor costs of more than three, sometimes more than five percent, Germany has registered a moderate growth of two percent. As a result, Germany has become more competitive – particularly in manufacturing.

Stable Labor Costs

The labor cost difference between Germany and its neighbors in Eastern Europe has been reduced significantly. Since 2020, labor costs in manufacturing have been rising in the EU-27 member states at an annual rate of 2.7 percent. While labor costs in some EU countries – and particularly those in Eastern Europe – have been growing at an annual rate of more than five percent, labor costs in Germany have been increasing at a rate of just 2.0 percent.

Highly Automated Manufacturing

Production in German manufacturing is highly automated. According to the International Federation of Robotics, 397 industrial robots per 10,000 employees have been in operation in 2021. In absolute terms, 25,915 industrial robots were deployed in that year alone. Today, Germany is the European leader in industrial automation. Clients in the automotive and electronics industries are the primary beneficiaries of industrial robot installation.

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Labor Market

Germany provides ready access to a competitive, highly skilled and motivated workforce.

Highly Skilled Workforce
Dual Education System
Motivated and Dependable Employees

Highly Skilled Workforce

Germany’s world-class education system ensures that the highest standards are always met. The German workforce comprises over 45 million people – making it the largest pool of skilled labor in the EU. Additionally, companies in Germany benefit from a great number of well trained employees: More than 80 percent of the German workforce has received a formal vocational training, is in possession of a trade or technical school certificate or an academic degree.

Germany’s globally renowned dual system of vocational training consists of about 1.2 million apprentices, around 400,000 training companies and more than 8,000 vocational schools. In addition, about 2.9 million students are enrolled at one of Germany’s more than 400 universities. A majority has opted for courses with a technical focus. Germany’s share of university students in the natural sciences, in mathematics, statistics and computer sciences, and in engineering is the highest in the EU, with 37.7 percent of all students in Germany (2021). According to OECD statistics, Germany has the highest number of graduates with a doctoral degree in the natural sciences and in engineering.

Dual Education System

In order to secure the economy’s demand for highly qualified personnel, Germany traditionally relies on a dual system of vocational education and training - combining the benefits of classroom-based and on-the-job training over a period of two to three years. Every fifth German company participates in the dual vocational training system, which turns their best apprentices into specialists that successfully comply with industry’s needs.

The apprentices also benefit from the system. In 2021, about 74 percent of all apprentices received an employment contract after completing their vocational training at the company. More than 1.2 million young people are currently enrolled in a vocational training program. Germany has Europe’s lowest youth unemployment rate with only 5.7 percent and enjoys an excellent reputation resulting from the dual system of vocational education and training.

Germany’s Dual Vocational Education and Training (VET) System

There are currently around 325 occupations recognized by the system. The German government, in close cooperation with the German Chambers of Industry and Commerce (IHKs) and the German Confederation of Skilled Crafts (ZDH), ensures that standards are adhered to rigidly, guaranteeing the quality of training provided in Germany.

The higher education system also applies the dual system of vocational training. There are currently more than 120,000 students taking part in a dual study program. These are usually offered by universities of applied sciences. Most of the almost 1,750 dual study programs are in engineering or in business. Today, more than 56,000 companies are participating.

Motivated and Dependable Employees

German labor flexibility is reflected in a higher than average employee motivation – exceeding that of most industrialized nations. In fact, according to the IMD World Competitiveness Yearbook, German employee motivation levels are higher than those recorded in the U.S., Canada, Russia, Poland or France. As a direct consequence Germans work more than their international peers and loose less days per annum due to labour disputes than other European nations.

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